CHAPTER 4

PERFORMANCE EVALUATION OF SCHEDULED COMMERCIAL BANKS IN

INDIA: A CAMEL APPROACH

INTRODUCTION

A sound financial system is important for a healthy and vibrant economy. The
banking sector is the major component of the Indian financial system, which play a vital
role in the functioning of Indian economy. Thus, it is important to measure the financial
performance of public and private sector banks through a generally accepted method. The
present chapter deals with financial performance evaluation of public sector and private
sector banks using internationally accepted CAMEL approach. This chapter is divided
into two sections. The first section focuses on the analysis of financial performance of
public and private sector banks during the study period 2006-07 to 2012-13. The second
section is devoted to bank group wise financial performance in terms of selected
parameters.

SECTION I

4.1 BANK - WISE FINANCIAL PERFORMANCE

In this section all public and private sector banks, which are operating in the year 2012-
13, are analyzed on the basis of CAMEL approach. CAMAEL approach is internationally
accepted ratio base method. CAMEL is an acronym for five components of bank safety
and soundness.

 Capital Adequacy
 Asset Quality
 Management Efficiency
 Earring Capacity
 Liquidity

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To know the financial performance, growth rate is calculated of different parameters with
their mean and coefficient of variation (CV). Ranks are also provided on the basis of
growth rate in the present study. CV is also calculated to measure the stability in different
parameters.

4.1 Capital Adequacy

It is one of the major indicators of financial health of a bank. It reflects the overall
financial position of the bank and also the ability of bank to meet the future capital
requirement. It is measured with the help of Capital Adequacy Ratio (CAR).

Capital Adequacy Ratio (CAR)

The banks are required to maintain CAR as per RBI norms. According to latest
RBI norms, banks should have a CAR of at least 12 percentage. CAR is calculated by
dividing the sum of Tier-I, Tier-II and Tier-III capital by aggregate of risk weighted
assets (RWA). The higher the CAR, the stronger the bank. The CAR of different banks is
shown in table 4.1.
On the basis of CAR, on an average, Kotak Mahindra Bank (17.61
percent) has top rank followed by Federal Bank (17.52 percent) and ICICI Bank (16.91
percent) among all public and private sector banks. Catholic Syrian Bank Ltd. (11.16
percent) and Dhanalakshmi Bank Ltd (11.39 percent) have least CAR among all banks
under study. These banks are taking high risk as their CAR is lowest. Out of public sector
banks, Canara Banks (13.69 percent) has highest CAR and Central Bank of India (11.67
percent) has lowest CAR. The CAR of public sector banks lies between 11.67 percent to
13.69 percent while private sector banks have range between 11.16 percent to 36.65
percent.
It is further observed that the rate of growth in CAR of ICICI Bank (8.18 percent) has
largest followed by Axis Bank (6.62 percent) and Yes Bank (5.07 percent) while
Ratanaker Bank Ltd. (-10.96 percent), Allahabad Bank (-2.09 percent) and Indian
Overseas Bank (-1.87 percent) have least CAR among all banks.

The coefficient of variation revealed hardly any variation exists with respect to
the above mentioned indictor.

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Table 4.1 Capital Adequacy Ratio of Public and Private Sector Banks: 2006-07 to 2012-13
SR.NO. NAME OF BANKS 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 MEAN CV GR RANK
1 ALLAHABAD BANK 12.52 11.99 13.11 13.62 12.96 12.83 11.03 12.58 0.07 -2.09 45
2 ANDHRA BANK 11.33 11.61 13.22 13.93 14.38 13.18 11.76 12.77 0.09 0.62 22
3 BANK OF BARODA 11.80 12.91 14.05 14.36 14.52 14.67 13.30 13.66 0.08 2.01 14
4 BANK OF INDIA 11.75 12.95 13.01 12.94 12.17 11.95 11.02 12.26 0.06 -1.06 38
5 BANK OF MAHARASHTRA 12.06 10.26 12.05 12.78 13.35 12.43 12.59 12.22 0.08 0.72 21
6 CANARA BANK 13.50 13.25 14.10 13.43 15.38 13.76 12.40 13.69 0.07 -1.41 40
7 CENTRAL BANK OF INDIA 10.40 10.42 13.12 12.24 11.64 12.40 11.49 11.67 0.09 1.68 17
8 CORPORATION BANK 12.76 12.09 13.61 15.37 14.11 13.00 12.33 13.32 0.09 -0.57 33
9 DENA BANK 11.52 11.09 12.07 12.77 13.41 11.51 11.03 11.91 0.07 -0.72 35
10 INDIAN BANK 14.14 12.86 13.98 12.71 13.56 13.47 13.08 13.40 0.04 -1.29 39
11 INDIAN OVERSEAS BANK 13.27 11.96 13.20 14.78 14.55 13.32 11.85 13.28 0.09 -1.87 44
12 ORIENTAL BANK OF COMMERCE 12.51 12.12 12.98 12.54 14.23 12.69 12.04 12.73 0.06 -0.64 34
13 PUNJAB & SIND BANK 12.88 11.57 14.35 13.10 12.94 13.26 12.91 13.00 0.06 0.04 26
14 PUNJAB NATIONAL BANK 12.29 12.96 14.03 14.16 12.42 12.63 12.72 13.03 0.06 0.57 23
15 SYNDICATE BANK 11.74 11.22 12.68 12.70 13.04 12.24 12.59 12.32 0.05 1.17 19
16 UCO BANK 11.56 10.09 11.93 12.51 13.71 12.35 14.22 12.34 0.11 3.51 8
17 UNION BANK OF INDIA 12.80 12.51 13.27 12.80 12.95 11.85 11.45 12.52 0.05 -1.84 43
18 UNITED BANK OF INDIA 12.02 11.88 13.28 13.21 13.05 12.69 11.66 12.54 0.05 -0.51 31
19 VIJAYA BANK 11.21 11.22 13.15 12.50 13.88 13.06 11.32 12.33 0.09 0.16 25
20 STATE BANK OF INDIA (SBI) 12.34 13.47 14.25 13.39 11.98 13.86 12.92 13.17 0.06 0.77 20
21 STATE BANK OF BIKANER & JAIPUR 12.89 13.50 14.52 13.30 11.68 13.76 12.16 13.12 0.07 -0.97 37
22 STATE BANK OF HYDERABAD 12.51 12.35 11.53 14.90 14.25 13.56 12.36 13.07 0.09 -0.20 30
23 STATE BANK OF MYSORE 11.47 12.34 12.99 12.42 13.76 12.55 11.79 12.47 0.06 0.46 24
24 STATE BANK OF PATIALA 12.38 12.50 12.60 13.26 13.41 12.30 11.12 12.51 0.06 -1.77 41
25 STATE BANK OF TRAVANCORE 11.68 12.68 14.03 13.74 12.54 13.55 11.70 12.85 0.07 0.03 27
27 CITY UNION BANK LTD. 12.58 12.48 12.69 13.46 12.75 12.57 13.98 12.93 0.04 1.77 16

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28 ING VYSYA BANK LTD. 10.56 10.20 11.65 14.91 12.94 14.00 13.24 12.50 0.14 3.84 7
29 TAMILNAD MERCANTILE BANK LTD. 16.77 15.35 16.05 15.54 15.13 14.69 15.01 15.51 0.05 -1.83 42
30 THE CATHOLIC SYRIAN BANK LTD. 9.58 10.87 12.29 10.82 11.22 11.08 12.29 11.16 0.08 4.24 5
31 THE DHANALAKSHMI BANK LTD. 9.77 9.21 15.38 12.99 11.80 9.49 11.06 11.39 0.20 2.09 13
32 THE FEDERAL BANK LTD. 13.43 22.46 20.22 18.36 16.79 16.64 14.73 17.52 0.18 1.55 18
33 THE JAMMU & KASHMIR BANK LTD. 13.24 12.8 14.48 15.89 13.72 13.36 12.83 13.76 0.08 -0.52 32
34 THE KARNATAKA BANK LTD. 11.03 12.17 13.48 12.37 13.33 12.84 13.22 12.63 0.07 3.06 11
35 THE KARUR VYSYA BANK LTD. 14.51 12.58 14.92 14.49 14.41 14.33 14.41 14.24 0.05 -0.12 28
36 THE LAKSHMI VILAS BANK LTD. 12.43 12.73 10.29 14.82 13.19 13.10 12.32 12.70 0.11 -0.15 29
37 NAINITAL BANK LTD. 12.89 12.32 13.10 15.68 16.90 15.09 14.43 14.34 0.12 1.90 15
38 THE RATNAKAR BANK LTD. 34.34 49.15 42.30 34.07 56.41 23.20 17.11 36.65 0.38 -10.96 46
39 THE SOUTH INDIAN BANK LTD. 11.08 13.80 14.76 15.39 14.01 14.00 13.91 13.85 0.10 3.86 6
40 AXIS BANK LTD. 11.57 13.73 13.69 15.80 12.65 13.66 17.00 14.01 0.13 6.62 2
41 DEVELOPMENT CREDIT BANK LTD. 11.34 13.38 13.30 14.85 13.25 15.41 13.61 13.59 0.10 3.09 10
42 HDFC BANK LTD. 13.08 13.6 15.70 17.44 16.22 16.50 16.80 15.62 0.11 4.26 4
43 ICICI BANK LTD. 11.69 14.92 15.53 19.41 19.54 18.52 18.74 16.91 0.17 8.18 1
44 INDUSIND BANK LTD. 12.54 11.91 12.55 15.33 15.89 13.85 15.36 13.92 0.12 3.44 9
45 KOTAK MAHINDRA BANK LTD. 13.46 18.65 20.01 18.35 19.22 17.52 16.05 17.61 0.13 2.98 12
46 YES BANK 13.6 13.6 16.60 20.61 16.50 17.90 18.30 16.73 0.15 5.07 3
Source : Compiled from Trend and Progress Report of RBI, Various Issues

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4.2 Assets Quality

Assets quality is another vital component of CAMEL approach to measure the financial
health of bank assets. Net NPA to Net Advances ratio is used to analyse assets quality of various
banks. This ratio measures the quality of advances. The lower the ratio the better is the quality of
advances. The data relating to Net NPA to Net Advances for the study period are presented in
table 4.2.

An analysis of the growth value of different banks for the entire period reveals that Ing
Vysya Bank Ltd. (-40.84%), The Ratanakar Bank Ltd. (-37.91%) and Yes Bank Ltd. (-30.66%)
were at the top while Andhra Bank (55.99%), State Bank Hyderabad (39.3%) and Indian Bank
(36.43%) were in the bottom. The growth rate of all public sector banks except Bank of
Maharashtra and Dena Bank are positive. This shows that assets of public sector banks are not
managing efficiently. The growth rate of all new private sector banks is negative as they are
managing their non performing assets more efficiently.

When the mean value of the different banks are taken in to consideration Yes Bank (0.09
%), Karur Vysa Bank Ltd. (0.24 %) and HDFC Bank (0.34 %) have secured better ranks while
UCO Bank (2.11 %), The Lakshmi Vilas Bank Ltd. (1.94 %) and Central Bank of India (1.84 %)
have secured least rank with regard to this indicator.

Inter-Bank comparison of co-efficient of variation reveals that there exists huge variation
on net NPA to net advances. Hence, stability in above indicator varies from bank to bank and
from year to year as well.

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Table 4.2 Net NPA to Net Advances of Public and Private Sector Banks: 2006-07 to 2012-13

SR.NO. NAME OF BANKS 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 MEAN CV GR RANK
1 ALLAHABAD BANK 1.07 0.80 0.72 2.15 0.79 0.98 3.19 1.39 0.67 19.95 37
2 ANDHRA BANK 0.17 0.15 0.18 2.77 0.38 0.91 2.45 1.00 1.13 55.99 45
3 BANK OF BARODA 0.60 0.47 0.31 2.53 0.35 0.54 1.28 0.87 0.92 13.42 31
4 BANK OF INDIA 0.95 0.52 0.44 2.67 0.91 1.47 2.06 1.29 0.64 13.73 32
5 BANK OF MAHARASHTRA 1.21 0.87 0.79 2.69 1.32 0.84 0.52 1.18 0.61 -13.11 7
6 CANARA BANK 0.94 0.84 1.09 2.98 1.10 1.46 2.18 1.51 0.52 15.05 35
7 CENTRAL BANK OF INDIA 1.70 1.45 1.24 1.82 0.65 3.09 2.90 1.84 0.48 9.31 26
8 CORPORATION BANK 0.47 0.32 0.29 3.66 0.46 0.87 1.19 1.04 1.16 16.72 36
9 DENA BANK 1.99 0.94 1.09 2.74 1.22 1.01 1.39 1.48 0.44 -5.76 14
10 INDIAN BANK 0.35 0.24 0.18 1.89 0.53 1.33 2.26 0.97 0.88 36.43 43
11 INDIAN OVERSEAS BANK 0.55 0.60 1.33 2.55 1.19 1.36 2.51 1.44 0.56 28.80 40
12 ORIENTAL BANK OF COMMERCE 0.49 0.99 0.65 4.16 0.98 2.21 2.25 1.68 0.78 28.93 41
13 PUNJAB & SIND BANK 0.66 0.37 0.32 2.05 0.56 1.19 2.16 1.04 0.75 21.84 39
14 PUNJAB NATIONAL BANK 0.76 0.64 0.17 2.28 0.85 1.52 2.34 1.22 0.69 20.65 38
15 SYNDICATE BANK 0.76 0.97 0.77 2.40 0.97 0.96 0.76 1.08 0.54 0.05 17
16 UCO BANK 2.14 1.98 1.18 2.49 1.84 1.96 3.17 2.11 0.29 6.78 22
17 UNION BANK OF INDIA 0.96 0.17 0.34 2.86 1.19 1.70 1.61 1.26 0.72 9.02 25
18 UNITED BANK OF INDIA 1.50 1.10 1.48 1.69 1.42 1.71 2.86 1.68 0.33 11.35 27
19 VIJAYA BANK 0.59 0.57 0.82 2.49 1.52 1.72 1.30 1.29 0.54 14.13 33
20 STATE BANK OF INDIA (SBI) 1.56 1.78 1.79 1.72 1.63 1.82 2.10 1.77 0.10 5.08 19
STATE BANK OF BIKANER &
21 JAIPUR 1.09 0.83 0.85 0.78 0.83 1.92 2.27 1.22 0.50 12.97 30
22 STATE BANK OF HYDERABAD 0.22 0.16 0.38 0.55 0.87 1.30 1.61 0.73 0.77 39.37 44
23 STATE BANK OF MYSORE 0.45 0.43 0.50 1.02 1.38 1.93 2.69 1.20 0.72 34.72 42
24 STATE BANK OF PATIALA 0.83 0.60 0.60 1.04 1.21 1.35 1.62 1.04 0.37 11.77 29
25 STATE BANK OF TRAVANCORE 1.08 0.94 0.58 0.91 0.98 1.54 1.46 1.07 0.31 5.15 20
26 IDBI LTD 1.12 1.30 0.92 1.02 1.06 1.61 1.58 1.23 0.22 5.90 21

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27 CITY UNION BANK LTD. 1.09 0.98 1.08 0.58 0.52 0.44 0.63 0.76 0.37 -8.73 12
28 ING VYSYA BANK LTD. 0.70 0.79 1.20 1.20 0.39 0.18 0.03 0.64 0.73 -40.84 1
TAMILNAD MERCANTILE BANK
29 LTD. 0.98 0.38 0.34 0.24 0.27 0.45 0.66 0.47 0.55 -6.38 13
THE CATHOLIC SYRIAN BANK
30 LTD. 1.98 1.61 2.39 1.58 1.74 1.10 1.12 1.65 0.28 -9.06 11
31 THE DHANALAKSHMI BANK LTD. 1.75 0.88 0.88 0.84 0.30 0.66 3.36 1.24 0.83 11.49 28
32 THE FEDERAL BANK LTD. 0.44 0.23 0.30 0.48 0.60 0.53 0.98 0.51 0.48 14.28 34
THE JAMMU & KASHMIR BANK
33 LTD. 1.13 1.07 1.37 0.28 0.20 0.15 0.14 0.62 0.88 -29.39 4
34 THE KARNATAKA BANK LTD. 1.22 0.98 0.98 1.31 1.62 2.11 1.51 1.39 0.29 3.62 18
35 THE KARUR VYSYA BANK LTD. 0.23 0.18 0.25 0.23 0.07 0.33 0.37 0.24 0.41 8.25 24
36 THE LAKSHMI VILAS BANK LTD. 1.58 1.55 1.24 4.11 0.90 1.74 2.43 1.94 0.55 7.44 23
37 THE RATNAKAR BANK LTD. 1.92 0.99 0.68 0.97 0.36 0.20 0.11 0.75 0.84 -37.91 2
38 THE SOUTH INDIAN BANK LTD. 0.98 0.33 1.13 0.39 0.29 0.28 0.78 0.60 0.60 -3.73 16
39 AXIS BANK LTD. 0.72 0.42 0.40 0.40 0.29 0.27 0.36 0.41 0.36 -10.91 10
DEVELOPMENT CREDIT BANK
40 LTD. 1.64 0.66 3.88 3.11 0.97 0.57 0.75 1.65 0.80 -12.23 8
41 HDFC BANK LTD. 0.43 0.47 0.63 0.31 0.19 0.18 0.20 0.34 0.50 -11.98 9
42 ICICI BANK LTD. 1.02 1.55 2.09 2.12 1.11 0.73 0.77 1.34 0.44 -4.58 15
43 INDUSIND BANK LTD. 2.47 2.27 1.14 0.50 0.28 0.27 0.31 1.03 0.93 -29.24 5
44 KOTAK MAHINDRA BANK LTD. 1.98 1.78 2.39 1.73 0.72 0.61 0.64 1.41 0.52 -17.16 6
45 YES BANK 0.09 0.09 0.33 0.06 0.03 0.05 0.01 0.09 1.16 -30.66 3
Source : Compiled from Trend and Progress Report of RBI, Various Issues (excluded Nainital Bank As data are not available)

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4.3 Management Efficiency

Management efficiency is an important parameter to judge the efficiency of human resources.

Physical measurement in terms of output is not possible in banking sector. Labour efficiency is
measured with the help of business per employee of different banks. Improvement in efficiency
will ultimately lead to larger profit and lower cost. Thus, profits per employee are also taken as
indicator to measure the efficiency of management. Business per employee and profit per
employee ratio are used to evaluate the efficiency of management.

4.3.1 Business per Employee (BPE)

Average business per employee is a good measure of management Efficiency. It is calculated the
total business divided by number of employees. Here, business means summation of deposits and
advances. In table 4.3 the average business per employee of different banks belonging to public
and private sector banks are presented. The average business per employee of Dena Bank has
increased from Rs. 1.99 Cr. in 2006-07 to Rs. 7.31 Cr. in 2012-13. A growth of 24.22percent
which is highest among all public and private sector banks. A bank wise analysis reveals that
Dena Bank (24.22 percent) followed by Bank of Baroda (24.16 percent) and Yes Bank (22.29
percent) made the highest growth in business per employee during the study period. On the other
hand, Indian Overseas Bank (-11.13 percent) , ICICI Banks (-5.42 percent) and Indusind Bank (-
3.48 percent) secured the lowest business per employees

Inter Bank comparison, on the basis of average, business per employees of Yes bank (Rs.13.67
Cr.) is highest followed by Axis bank (Rs. 11.67 Cr.) and IDBI (Rs.10.20 Cr). On the other hand,
United Bank of India (Rs. 2.53 Cr.), Central Bank of India (Rs.2.83 Cr.) and Bank of
Maharashtra (Rs.3.06 Cr.) have got bottom three positions. There did not show any significant
inter-bank variation with respect to BPE.

The study also concludes that BPE of all banks increased through the study period except few
banks.

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Table 4.3 Business per Employees of Public and Private Sector Banks: 2006-07 to 2012-13 (In Cr.)

SR.NO. NAME OF BANKS 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 MEAN CV GR RANK
1 ALLAHABAD BANK 3.68 4.85 3.75 5.76 6.70 8.36 5.25 5.48 0.30 6.10 38
2 ANDHRA BANK 4.14 4.30 4.58 7.00 9.00 9.00 9.00 6.72 0.35 13.82 17
3 BANK OF BARODA 2.73 3.94 6.00 8.00 11.00 12.00 10.00 7.67 0.47 24.16 2
4 BANK OF INDIA 2.71 4.95 7.49 4.39 6.20 6.40 6.44 5.51 0.29 15.52 13
5 BANK OF MAHARASHTRA 1.95 2.39 2.76 3.21 2.38 3.12 5.59 3.06 0.39 19.19 7
6 CANARA BANK 3.24 3.65 4.97 7.35 9.76 8.21 6.96 6.31 0.38 13.59 19
7 CENTRAL BANK OF INDIA 1.35 1.56 1.71 3.30 3.96 1.51 2.83 2.32 0.45 13.13 21
8 CORPORATION BANK 4.79 6.52 7.64 9.52 10.92 10.90 9.68 8.57 0.27 12.44 24
9 DENA BANK 1.99 3.61 4.28 4.86 6.15 7.87 7.31 5.15 0.41 24.22 1
10 INDIAN BANK 3.64 4.91 6.23 7.92 8.88 9.30 8.38 7.04 0.31 14.91 16
11 INDIAN OVERSEAS BANK 4.04 4.82 5.00 2.63 4.16 3.84 1.99 3.78 0.29 -11.13 46
12 ORIENTAL BANK OF COMMERCE 5.61 5.84 6.18 7.39 9.04 6.21 7.03 6.76 0.18 3.83 41
13 PUNJAB & SIND BANK 2.34 4.24 5.00 6.00 6.00 6.00 4.00 4.80 0.29 9.35 32
14 PUNJAB NATIONAL BANK 2.68 3.66 5.64 7.31 8.35 8.42 8.06 6.30 0.37 20.14 4
15 SYNDICATE BANK 2.76 3.18 3.64 3.18 3.99 5.29 8.11 4.31 0.43 19.68 5
16 UCO BANK 1.30 1.76 2.40 4.43 4.19 5.09 2.72 3.13 0.46 13.09 22
17 UNION BANK OF INDIA 3.25 5.39 6.28 7.47 8.00 6.00 7.00 6.20 0.25 13.64 18
18 UNITED BANK OF INDIA 1.59 1.99 1.22 2.11 3.48 4.08 2.53 2.43 0.42 8.05 35
19 VIJAYA BANK 3.04 3.32 2.30 4.50 6.30 5.00 5.00 4.21 0.33 8.65 34
20 STATE BANK OF INDIA (SBI) 2.37 3.73 4.74 4.46 3.84 5.31 6.45 4.41 0.29 18.18 8
21 STATE BANK OF BIKANER & JAIPUR 2.57 2.73 3.55 4.00 5.00 5.00 6.00 4.12 0.31 15.18 15
22 STATE BANK OF HYDERABAD 3.92 4.35 4.87 5.58 7.89 8.63 8.29 6.22 0.32 13.30 20
23 STATE BANK OF MYSORE 2.60 3.28 3.00 4.41 5.00 4.00 4.00 3.76 0.22 7.44 36
24 STATE BANK OF PATIALA 3.24 3.70 4.68 4.45 5.20 5.87 4.62 4.54 0.19 6.09 39
25 STATE BANK OF TRAVANCORE 2.96 3.40 5.00 6.00 8.00 4.20 5.00 4.94 0.34 9.13 33
26 IDBI LTD 8.44 8.86 8.42 8.44 11.93 13.16 12.17 10.20 0.21 6.29 37

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27 CITY UNION BANK LTD. 3.50 4.21 5.65 6.51 7.81 8.47 9.38 6.50 0.34 17.85 10
28 ING VYSYA BANK LTD. 4.86 5.47 6.06 6.24 6.75 5.60 6.44 5.92 0.11 4.80 40
29 TAMILNAD MERCANTILE BANK LTD. 4.51 5.42 6.79 8.70 9.59 10.68 11.33 8.15 0.32 16.59 12
30 THE CATHOLIC SYRIAN BANK LTD. 2.78 3.17 3.74 4.19 5.37 6.75 7.36 4.77 0.37 17.62 11
31 THE DHANALAKSHMI BANK LTD. 3.67 4.09 5.86 3.70 5.89 5.93 7.30 5.20 0.27 12.15 26
32 THE FEDERAL BANK LTD. 5.44 6.40 7.50 8.13 9.23 10.11 10.75 8.22 0.24 12.02 27
33 THE JAMMU & KASHMIR BANK LTD. 5.85 5.96 5.00 7.31 8.56 8.86 10.49 7.43 0.26 10.22 29
34 THE KARNATAKA BANK LTD. 5.24 5.89 6.49 7.27 7.71 8.59 9.66 7.26 0.21 10.73 28
35 THE KARUR VYSYA BANK LTD. 4.89 6.04 6.38 7.89 9.26 9.84 10.14 7.78 0.26 12.92 23
36 THE LAKSHMI VILAS BANK LTD. 4.30 4.53 5.10 5.60 7.19 7.87 8.63 6.17 0.28 12.31 25
37 NAINITAL BANK LTD. 2.79 3.66 4.25 5.21 5.85 6.56 7.48 5.11 0.32 17.86 9
38 THE RATNAKAR BANK LTD. 2.54 3.10 3.73 3.91 4.35 6.69 7.39 4.53 0.40 19.45 6
39 THE SOUTH INDIAN BANK LTD. 5.08 6.00 6.45 7.71 9.18 10.79 12.01 8.18 0.32 15.42 14
40 AXIS BANK LTD. 10.24 11.17 10.60 11.11 13.66 12.76 12.15 11.67 0.11 2.89 43
41 DEVELOPMENT CREDIT BANK LTD. 3.91 4.54 3.79 5.15 4.91 5.14 6.74 4.88 0.20 9.50 31
42 HDFC BANK LTD. 6.07 5.06 4.46 5.90 6.53 6.54 7.50 6.01 0.17 3.59 42
43 ICICI BANK LTD. 10.27 10.08 11.54 7.65 7.35 7.08 7.35 8.76 0.21 -5.42 45
44 INDUSIND BANK LTD. 10.40 10.63 8.36 8.37 8.44 7.88 8.41 8.93 0.12 -3.48 44
45 KOTAK MAHINDRA BANK LTD. 3.84 3.84 3.47 4.87 5.35 6.13 6.86 4.91 0.26 10.16 30
46 YES BANK 5.31 6.83 9.88 16.24 22.20 17.48 17.74 13.67 0.46 22.29 3
Sources : Compiled from Trend and Progress Report of RBI, Various Issues

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4.3.2 PROFIT PER EMPLOYEES (PPE)

Profit per employee is another important ratio to measure the management efficiency. Profit per
employee is calculated divided the profit by number of employees. The average profit per
employee of public and private sector banks during the period 2006-07 to 2012-13 is presented
in table 4.4. It may be seen from the table that growth rate of all banks are positive. This reveals
that profit per employee has increased during the entire study period.

On the basis of average profit per employee, IDBI bank Ltd bank has registered top position
followed by Corporation Bank and Oriental Banks of Commerce among all public sector banks.
Yes Bank, Axis Bank and ICICI Bank have also highest mean profit per employee among all
private sector banks. From the view point of profit per Employee, average PPE of new private
sector banks is more than old private sector banks.

The growth rate of profitability per employee of Development Credit Bank (52.34percent) is
highest while average PPE of this bank is lowest i.e. Rs. 0.20 Lakh. The CV of above bank is
also highest which reflect variation in PPE due to losses in the year 2008-09 and 2009-10. When
the growth rate of various banks are considered, Development Credit Bank, Ratnaker Bank,
Dhanlakshmi Bank secured top three ranks where as Karanataka Bank, ICICI and HDFC are
obtained least three positions.

It is further observed that variation in CV is not significant except Development Credit

Bank. Hence, profit per employee of different banks is stable during the period under study.

58
Table 4.4 Profit per Employee of Public and Private Sector Banks: 2006-07 to 2012-13 (In Lakh)
SR.NO. NAME OF BANKS 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 MEAN CV GR RANK
1 ALLAHABAD BANK 4.95 6.04 7.06 8.45 10.63 12.17 13.73 9.00 0.36 18.53 22
2 ANDHRA BANK 5.36 6.27 7.28 9.39 11.65 12.62 13.55 9.45 0.34 16.71 31
3 BANK OF BARODA 5.55 7.10 9.14 9.81 12.29 14.66 16.89 10.78 0.38 20.38 16
4 BANK OF INDIA 4.98 6.52 8.33 10.11 12.84 13.60 15.82 10.31 0.38 21.24 12
5 BANK OF MAHARASHTRA 4.05 5.16 6.36 7.62 8.25 9.67 12.56 7.67 0.37 20.76 14
6 CANARA BANK 5.49 6.09 7.80 9.82 11.99 13.74 14.20 9.88 0.36 17.17 27
7 CENTRAL BANK OF INDIA 3.04 4.01 5.60 7.11 8.35 8.62 9.73 6.64 0.38 21.41 9
8 CORPORATION BANK 6.37 8.39 10.49 12.69 15.73 17.13 19.21 12.86 0.37 20.20 17
9 DENA BANK 4.58 5.59 7.14 8.27 10.77 12.84 14.31 9.07 0.41 20.91 13
10 INDIAN BANK 3.64 4.88 6.17 7.61 9.30 11.14 13.01 7.96 0.43 23.65 7
11 INDIAN OVERSEAS BANK 4.67 5.83 6.90 7.12 10.05 11.76 12.88 8.46 0.37 18.41 23
12 ORIENTAL BANK OF COMMERCE 7.43 9.24 11.42 13.31 14.18 14.62 16.20 12.34 0.25 13.89 37
13 PUNJAB & SIND BANK 3.29 4.67 6.56 9.63 11.90 13.02 13.70 8.97 0.47 26.87 5
14 PUNJAB NATIONAL BANK 4.07 5.05 6.55 8.08 10.18 11.32 11.65 8.13 0.37 19.14 21
15 SYNDICATE BANK 4.89 5.86 7.51 7.47 8.75 10.74 12.57 8.26 0.33 17.04 28
16 UCO BANK 4.64 5.80 7.32 8.64 10.69 11.64 11.89 8.66 0.33 16.98 29
17 UNION BANK OF INDIA 5.09 6.99 6.94 8.53 10.43 10.70 12.15 8.69 0.29 15.60 34
18 UNITED BANK OF INDIA 3.50 4.63 5.85 7.14 8.60 9.71 10.83 7.18 0.38 20.71 15
19 VIJAYA BANK 4.55 6.13 7.56 8.36 9.28 11.28 12.40 8.51 0.32 18.18 25
20 STATE BANK OF INDIA (SBI) 3.57 4.56 5.56 6.36 7.04 7.98 9.43 6.36 0.32 17.57 26
21 STATE BANK OF BIKANER & JAIPUR 3.56 4.45 5.55 6.28 7.51 8.27 9.00 6.37 0.31 16.72 30
22 STATE BANK OF HYDERABAD 4.74 5.99 8.40 7.55 10.38 11.69 13.88 8.95 0.36 19.63 19
23 STATE BANK OF MYSORE 3.98 4.95 6.02 6.72 7.95 8.81 9.55 6.85 0.30 15.71 33
24 STATE BANK OF PATIALA 6.00 7.60 9.10 8.95 9.56 10.56 11.35 9.02 0.20 11.22 40
25 STATE BANK OF TRAVANCORE 5.06 5.59 6.58 6.96 8.88 10.66 12.59 8.05 0.35 16.40 32
26 IDBI LTD 13.87 18.09 20.30 24.17 23.46 23.87 25.64 21.34 0.20 10.78 41
27 CITY UNION BANK LTD. 3.84 4.69 4.98 5.81 8.00 8.00 9.00 6.33 0.31 15.25 35

59
28 ING VYSYA BANK LTD. 1.66 2.68 3.03 3.88 4.53 4.56 6.28 3.80 0.40 24.83 6
29 TAMILNAD MERCANTILE BANK LTD. 4.76 5.31 6.43 8.14 9.91 10.98 13.88 8.49 0.39 19.53 20
30 THE CATHOLIC SYRIAN BANK LTD. 0.68 1.34 1.39 0.06 0.45 0.97 1.16 0.86 0.57 9.31 42
31 THE DHANALAKSHMI BANK LTD. 1.18 2.02 4.10 0.71 0.71 -3.33 10.00 2.20 1.86 42.79 3
32 THE FEDERAL BANK LTD. 4.43 5.30 6.90 6.01 7.26 9.00 9.00 6.84 0.26 12.54 38
33 THE JAMMU & KASHMIR BANK LTD. 4.00 5.00 7.00 7.00 8.00 9.00 11.00 7.29 0.32 18.36 24
34 THE KARNATAKA BANK LTD. 4.00 5.00 5.00 3.00 4.00 4.00 5.00 4.29 0.18 3.79 46
35 THE KARUR VYSYA BANK LTD. 4.87 5.82 5.98 8.05 9.09 8.84 8.18 7.26 0.23 9.03 43
36 THE LAKSHMI VILAS BANK LTD. 0.91 1.22 2.07 1.13 3.85 3.50 2.91 2.23 0.54 21.38 10
37 NAINITAL BANK LTD. 3.00 4.00 6.00 6.00 6.00 8.00 7.00 5.71 0.30 15.17 36
38 THE RATNAKAR BANK LTD. 0.54 3.13 5.00 3.00 1.00 5.00 5.00 3.24 0.59 44.91 2
39 THE SOUTH INDIAN BANK LTD. 2.69 3.59 4.31 5.00 5.00 7.00 8.00 5.08 0.37 19.92 18
40 AXIS BANK LTD. 7.59 8.39 10.02 12.00 14.00 14.00 15.00 11.57 0.25 12.02 39
41 DEVELOPMENT CREDIT BANK LTD. 0.40 2.00 -4.00 -5.00 1.00 2.00 5.00 0.20 17.66 52.34 1
42 HDFC BANK LTD. 6.13 4.97 4.18 5.98 7.37 8.00 10.00 6.66 0.30 8.50 44
43 ICICI BANK LTD. 9.00 10.00 11.00 9.00 10.00 11.00 14.00 10.57 0.16 7.64 45
44 INDUSIND BANK LTD. 2.61 2.62 3.49 6.51 8.24 8.57 9.22 5.89 0.50 23.41 8
45 KOTAK MAHINDRA BANK LTD. 3.13 3.81 3.00 7.00 8.00 9.00 10.00 6.28 0.47 21.36 11
46 YES BANK 3.86 6.35 11.38 16.75 20.89 20.42 21.02 14.38 0.50 32.64 4
Sources : Compiled from Trend and Progress Report of RBI, Various Issues

60
4.4 EARNING CAPACITY

The earning Capacity is very important criteria that reflect the ability of a bank to earn
consistency. Banks should increase their income resources to enhance their earning capacity.
Banks can increase their growth and productivity by increasing earning capacity. Earning
capacity is measured with the help of return on assets and spread as percentage of assets.

4.4.1 RETURN ON ASSETS (ROA)

ROA is defined as net profit divided by average total assets. This ratio measures a bank profit per
currency unit of assets. This is the main indicator of profitability used in international
comparisons and it is one among the guidelines of RBI for balance sheet analysis of banks
(Surya Chandra Rao, 2008). The Returns on Assets of different banks are shown in table 4.5

An Inter bank analysis shows that average return on assets of City Union Bank (Rs. 1.59 Lakh) is
highest followed by Yes Bank (Rs.1.58 Lakh) and Karur Vysya Bank Ltd (Rs. 1.58 Lakh).
Average return on assets of Development Credit Bank (Rs. 0.04 Lakh) is lowest followed by
Catholic Syrian Bank (Rs. 0.32 Lakh) and Central Bank of India (Rs.0.52 Lakh). Indian Bank,
Punjab National Bank and Andhra Bank are top most public sector banks while City Union
Banks, Karur Vysya Bank Ltd and Yes Bank are top most private sector banks. When a
comparison of growth rate of different banks is made, Development Credit Bank (35.67 percent),
Indusind Bank (29.85 percent) and Ratnakar Bank Ltd (22.74 percent) are in the top while
Dhanlakshmi Bank (-40.91 percent), Indian Overseas Bank (-25.11 percent) and Punjab and Sind
Bank (-12.93 percent) were at the bottom. There did not exists any significant inter bank
variation with respect to return on assets, except Development Credit Bank Ltd. It is further
observe that growth rate of most public sector banks and old private sector banks are negative.

61
Table 4.5 Return on Assets of Public and Private Sector Banks: 2006-07 to 2012-13 (In Lakh)

SR.NO. NAME OF BANKS 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 MEAN CV GR RANK
1 ALLAHABAD BANK 1.26 1.32 0.90 1.16 1.11 1.02 0.64 1.06 0.22 -10.68 43
2 ANDHRA BANK 1.31 1.16 1.09 1.39 1.36 1.19 0.99 1.21 0.12 -4.56 32
3 BANK OF BARODA 0.80 0.89 1.09 1.21 1.33 1.24 0.9 1.07 0.19 1.98 15
4 BANK OF INDIA 0.88 1.25 1.49 0.70 0.79 0.72 0.65 0.93 0.35 -4.92 34
5 BANK OF MAHARASHTRA 0.76 0.75 0.70 0.72 0.47 0.55 0.74 0.67 0.17 -0.44 22
6 CANARA BANK 0.98 0.92 1.06 1.30 1.42 0.95 0.77 1.06 0.21 -3.94 29
7 CENTRAL BANK OF INDIA 0.62 0.54 0.45 0.66 0.70 0.26 0.44 0.52 0.29 -5.56 35
8 CORPORATION BANK 1.17 1.29 1.28 1.28 1.21 1.06 0.88 1.17 0.13 -4.64 33
9 DENA BANK 0.71 1.06 1.02 1.01 1.00 1.08 0.85 0.96 0.14 3.04 13
10 INDIAN BANK 1.46 1.64 1.62 1.67 1.53 1.31 1.02 1.46 0.16 -5.80 37
11 INDIAN OVERSEAS BANK 1.36 1.30 1.17 0.53 0.71 0.52 0.24 0.83 0.53 -25.11 45
12 ORIENTAL BANK OF COMMERCE 1.21 1.02 0.88 0.91 1.03 0.67 0.71 0.92 0.21 -8.50 41
13 PUNJAB & SIND BANK 1.01 1.49 1.24 1.05 0.90 0.65 0.44 0.97 0.36 -12.93 44
14 PUNJAB NATIONAL BANK 1.03 1.15 1.39 1.44 1.34 1.19 1 1.22 0.14 -0.49 23
15 SYNDICATE BANK 0.91 0.88 0.81 0.62 0.76 0.81 1.07 0.84 0.17 2.74 14
16 UCO BANK 0.47 0.52 0.59 0.87 0.66 0.69 0.33 0.59 0.29 -5.72 36
17 UNION BANK OF INDIA 0.92 1.26 1.27 1.25 1.05 0.79 0.79 1.05 0.21 -2.51 28
18 UNITED BANK OF INDIA 0.73 0.68 0.34 0.45 0.66 0.7 0.38 0.56 0.30 -10.31 42
19 VIJAYA BANK 0.92 0.75 0.59 0.76 0.72 0.66 0.59 0.71 0.16 -7.14 39
20 STATE BANK OF INDIA (SBI) 0.84 1.01 1.04 0.88 0.71 0.88 0.91 0.90 0.12 1.34 17
21 STATE BANK OF BIKANER & JAIPUR 1.00 0.87 0.92 0.93 0.96 0.99 0.96 0.95 0.05 -0.68 24
22 STATE BANK OF HYDERABAD 1.14 1.00 0.91 1.03 1.22 1.15 0.99 1.06 0.10 -2.32 27
23 STATE BANK OF MYSORE 1.10 1.08 0.91 1.06 1.03 0.67 0.66 0.93 0.21 -8.16 40
24 STATE BANK OF PATIALA 0.77 0.83 0.83 0.79 0.88 0.93 0.68 0.82 0.10 -2.05 25
25 STATE BANK OF TRAVANCORE 0.86 0.89 1.30 1.26 1.12 0.65 0.66 0.96 0.28 -4.32 31
26 IDBI LTD 0.67 0.67 0.62 0.53 0.73 0.81 0.69 0.67 0.13 0.49 19

62
27 CITY UNION BANK LTD. 1.57 1.60 1.50 1.52 1.67 1.71 1.58 1.59 0.05 0.11 20
28 ING VYSYA BANK LTD. 0.52 0.74 0.70 0.80 0.89 1.09 1.26 0.86 0.29 15.89 4
29 TAMILNAD MERCANTILE BANK LTD. 1.57 1.58 1.51 1.54 1.74 1.75 2.00 1.67 0.10 4.12 12
30 THE CATHOLIC SYRIAN BANK LTD. 0.37 0.64 0.57 0.02 0.14 0.24 0.25 0.32 0.70 -6.33 38
31 THE DHANALAKSHMI BANK LTD. 0.47 0.76 1.21 0.35 0.23 0.73 0.02 0.54 0.74 -40.91 46
32 THE FEDERAL BANK LTD. 1.38 1.34 1.48 1.15 1.34 1.41 1.35 1.35 0.08 -0.37 21
33 THE JAMMU & KASHMIR BANK LTD. 0.96 1.09 1.09 1.20 1.22 1.56 1.70 1.26 0.21 9.99 6
34 THE KARNATAKA BANK LTD. 1.15 1.37 1.25 0.67 0.72 0.73 0.89 0.97 0.29 -4.18 30
35 THE KARUR VYSYA BANK LTD. 1.53 1.63 1.49 1.76 1.71 1.56 1.35 1.58 0.09 -2.06 26
36 THE LAKSHMI VILAS BANK LTD. 0.33 0.41 0.71 0.33 0.91 0.73 0.54 0.57 0.40 8.55 7
37 NAINITAL BANK LTD. 1.26 1.67 1.68 1.73 1.56 1.75 1.30 1.56 0.13 0.52 18
38 THE RATNAKAR BANK LTD. 0.31 1.31 1.96 1.05 0.53 1.38 1.06 1.09 0.51 22.74 3
39 THE SOUTH INDIAN BANK LTD. 0.88 1.01 1.09 1.07 1.05 1.12 1.17 1.06 0.09 4.86 11
40 AXIS BANK LTD. 1.10 1.24 1.44 1.67 1.68 1.68 1.70 1.50 0.16 7.52 9
41 DEVELOPMENT CREDIT BANK LTD. 0.17 0.60 -1.25 -1.30 0.30 0.68 1.06 0.04 25.32 35.67 1
42 HDFC BANK LTD. 1.33 1.32 1.28 1.53 1.58 1.80 1.90 1.53 0.16 6.12 10
43 ICICI BANK LTD. 1.09 1.12 0.98 1.13 1.35 1.50 1.70 1.27 0.20 7.69 8
44 INDUSIND BANK LTD. 0.34 0.34 0.58 1.14 1.46 1.57 1.63 1.01 0.57 29.85 2
45 KOTAK MAHINDRA BANK LTD. 0.94 1.10 1.03 1.72 1.77 1.83 1.81 1.46 0.28 11.54 5
46 YES BANK 1.44 1.54 1.59 1.79 1.58 1.57 1.57 1.58 0.07 1.45 16
Sources : Compiled from Trend and Progress Report of RBI, Various Issues

63
4.4.2 SPREAD AS A PERCENTAGE TO ASSETS

Spread is the difference between interest income and interest expenditure. It is also known as net

interest margin. Other things being equal, there is positive relationship between spread and

profitability of bank. The data relating to spread are shown in table 4.6.

On the basis of average spread, Kotak Mahindra Bank (4.21 percent), HDFC Bank (3.87 percent)

and Nainital Bank Ltd. (3.59 percent) are top three banks while IDBI Ltd. (1.11 percent), UCO

Bank (1.97 percent) and Corporation Bank (2.01 percent) are three least efficient banks. Indian

banks has highest spread as percentage of assets ratio among all public sector banks. Among SBI

and its associates, State Bank of Bikaner and Jaipur (SBBJ) has highest spread ratio.

When we look in to the growth rate of different banks, it is found that IDBI Bank has highest

growth rate followed by Indusind Bank and ICICI Bank while Punjab and Sind Bank, Vijay

Bank and Ratanakar Bank have posted lowest growth rate. An insight reveals that most of new

private banks have high growth rate in comparison to other banks. When the growth rates of

different banks are taken into consideration, the growth rates of almost all banks are negative

with regard to this parameter except new private sector banks.

There exist marginal differences in CV with regard to this indicator during the period under

study.

64
Table 4.6 Spread as a Percentage to Assets of Public and Private Sector Banks: 2006-07 to 2012-13
SR.NO. NAME OF BANKS 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 MEAN CV GR RANK
1 ALLAHABAD BANK 2.59 2.15 2.21 2.18 2.66 2.82 2.38 2.43 0.11 -1.38 24
2 ANDHRA BANK 2.98 2.51 2.38 2.43 2.96 3.02 2.57 2.69 0.10 -2.46 29
3 BANK OF BARODA 2.50 2.18 2.26 2.13 2.46 2.31 2.07 2.27 0.07 -3.11 33
4 BANK OF INDIA 2.43 2.36 2.44 2.09 2.22 2.16 1.99 2.24 0.08 -3.22 34
5 BANK OF MAHARASHTRA 2.81 2.55 2.13 1.82 2.58 2.76 2.59 2.46 0.14 -1.30 23
6 CANARA BANK 2.43 1.96 2.15 2.14 2.33 2.06 1.91 2.14 0.09 -3.90 39
7 CENTRAL BANK OF INDIA 2.66 1.79 1.51 1.39 2.54 2.25 2.14 2.04 0.24 -3.56 35
8 CORPORATION BANK 2.48 2.17 1.95 1.70 2.05 1.92 1.77 2.01 0.13 -5.46 41
9 DENA BANK 2.72 2.31 2.20 1.91 2.49 2.40 2.10 2.30 0.12 -4.21 40
10 INDIAN BANK 3.17 2.82 3.10 3.12 3.32 3.12 2.78 3.06 0.06 -2.19 26
11 INDIAN OVERSEAS BANK 3.11 2.63 2.37 2.42 2.35 2.28 2.15 2.47 0.13 -6.01 43
12 ORIENTAL BANK OF COMMERCE 2.29 1.85 1.77 2.12 2.59 2.37 2.34 2.19 0.13 0.40 19
13 PUNJAB & SIND BANK 3.49 2.64 2.45 2.09 2.28 2.06 2.04 2.43 0.21 -8.58 46
14 PUNJAB NATIONAL BANK 3.21 2.78 2.77 2.86 3.12 2.93 3.10 2.97 0.06 -0.57 21
15 SYNDICATE BANK 2.41 1.93 1.96 1.97 2.80 2.79 2.54 2.34 0.17 0.86 17
16 UCO BANK 2.12 1.66 1.47 1.69 2.35 2.16 2.31 1.97 0.18 1.42 12
17 UNION BANK OF INDIA 2.72 2.49 2.37 2.15 2.63 2.59 2.42 2.48 0.08 -1.92 25
18 UNITED BANK OF INDIA 2.72 1.67 1.87 1.81 2.41 2.43 2.17 2.15 0.18 -3.68 37
19 VIJAYA BANK 2.53 1.65 1.80 2.06 2.38 1.99 1.69 2.02 0.17 -6.49 45
20 STATE BANK OF INDIA (SBI) 2.66 2.36 2.16 2.25 2.66 3.24 2.83 2.59 0.14 1.05 16
21 STATE BANK OF BIKANER & JAIPUR 2.72 2.28 2.38 2.24 2.81 3.06 2.98 2.64 0.13 1.55 11
22 STATE BANK OF HYDERABAD 2.50 1.81 1.91 2.11 2.67 2.84 2.88 2.39 0.19 2.36 9
23 STATE BANK OF MYSORE 2.55 2.31 2.07 2.72 3.14 2.62 2.74 2.59 0.13 1.21 14
24 STATE BANK OF PATIALA 2.12 1.51 1.62 2.02 2.87 2.37 2.26 2.11 0.22 1.07 15
25 STATE BANK OF TRAVANCORE 2.61 2.17 2.60 2.36 2.39 2.21 2.10 2.35 0.09 -3.61 36
26 IDBI LTD 0.63 0.50 0.72 0.97 1.71 1.57 1.66 1.11 0.47 17.47 1

65
27 CITY UNION BANK LTD. 3.12 2.79 2.62 2.41 2.88 2.72 2.72 2.75 0.08 -2.30 27
28 ING VYSYA BANK LTD. 2.31 1.95 2.04 2.45 2.58 2.57 2.81 2.39 0.13 3.29 7
29 TAMILNAD MERCANTILE BANK LTD. 4.17 3.11 2.97 2.76 3.37 3.20 3.63 3.32 0.14 -2.30 28
30 THE CATHOLIC SYRIAN BANK LTD. 2.97 2.75 2.35 1.60 2.52 2.55 2.49 2.46 0.18 -2.89 32
31 THE DHANALAKSHMI BANK LTD. 2.86 2.60 2.16 1.74 1.86 1.69 2.00 2.13 0.21 -5.80 42
32 THE FEDERAL BANK LTD. 2.86 2.67 3.39 3.23 3.39 3.22 2.78 3.08 0.10 -0.45 20
33 THE JAMMU & KASHMIR BANK LTD. 2.68 2.47 2.61 2.63 3.06 3.05 3.23 2.82 0.10 3.15 8
34 THE KARNATAKA BANK LTD. 2.59 2.43 2.21 0.99 1.93 2.02 2.18 2.05 0.25 -2.85 31
35 THE KARUR VYSYA BANK LTD. 3.13 2.53 2.41 2.58 2.72 2.44 2.48 2.61 0.10 -3.83 38
36 THE LAKSHMI VILAS BANK LTD. 2.04 1.90 1.85 2.38 2.74 2.30 2.22 2.20 0.14 1.38 13
37 NAINITAL BANK LTD. 3.96 3.68 3.80 3.25 3.52 3.56 3.40 3.59 0.07 -2.55 30
38 THE RATNAKAR BANK LTD. 2.95 3.70 3.72 2.82 2.95 2.59 1.99 2.96 0.21 -6.40 44
39 THE SOUTH INDIAN BANK LTD. 2.69 2.31 2.57 2.23 2.41 2.53 2.57 2.47 0.07 -0.76 22
40 AXIS BANK LTD. 2.00 2.36 2.50 2.77 2.70 2.81 2.84 2.57 0.12 5.97 5
41 DEVELOPMENT CREDIT BANK LTD. 2.27 2.46 3.32 2.31 2.55 2.62 2.52 2.58 0.14 1.75 10
42 HDFC BANK LTD. 3.80 3.93 4.05 3.77 3.80 3.81 3.95 3.87 0.03 0.64 18
43 ICICI BANK LTD. 1.64 1.83 2.21 2.23 2.22 2.19 2.58 2.13 0.14 7.91 3
44 INDUSIND BANK LTD. 1.30 1.46 1.66 2.51 3.02 2.96 3.05 2.28 0.34 15.29 2
45 KOTAK MAHINDRA BANK LTD. 3.11 4.33 5.29 4.96 4.13 3.83 3.83 4.21 0.17 3.52 6
46 YES BANK 1.54 1.98 2.22 2.17 2.11 2.19 2.24 2.07 0.12 6.40 4
Sources : Compiled from Trend and Progress Report of RBI, Various Issues

66
4.5 LIQUIDITY

Liquidity is also another important parameter which measures the capacity of banks to
meet its financial obligations. There should be a proper balance so far liquidity is concern. If
liquidity is too much low, then banks are not in a position to meet its current financial liabilities.
On the other hand, if liquidity is too much high then banks are not utilizing their cash properly.
Thus, a proper balance is necessary in liquidity so that banks can generate high profit while at the
same time provide liquidity to the depositors. Credit- Deposits ratio is used to evaluate liquidity.

4.5.1 Credit-Deposit Ratio

To measure the liquidity of banks credit Deposit Ratio is used. The C-D ratio for all public and
private sector banks are shown in table 4.7.

Inter bank analysis, on an average, with respect to this indicator reveals that IDBI (98.63 %),
Kotak Mahindra Bank (97.70 %) and ICICI Banks (94.48 %) occupied top three ranks with
higher C-D Ratio , while Nainital Bank Ltd.(55.14 %), The Jammu and Kashmir Bank (62.98 %)
and Karnataka Bank Ltd. (64.23 %) were in the bottom.

Development Credit Bank (4.57%) followed by Indusind Bank (4.52%) and Ratnakar Bank Ltd.
(3.97%) have registered higher growth rates as far as C-D ratio is concerned where as IDBI Bank
Ltd (-8.17%), Jammu and Kashmir bank Ltd.(-1.73%) and Yes Bank (-1.43%) posted lower
growth rate.

A deep insight reveals that C-D ratio of IDBI, on an average, was highest where as
growth rate of this bank was lowest among all banks. Thus, trend is just reverse, when growth
rate data is considered.

There exist marginal differences in CV with regard to this indicator, indicating high
stability among the banks.

67
Table 4.7 Credit-Deposit Ratio of Public and Private Sector Banks: 2006-07 to 2012-13
SR.NO. NAME OF BANKS 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 MEAN CV GR RANK
1 ALLAHABAD BANK 69.34 69.43 69.20 67.52 70.99 69.64 72.45 69.79 0.02 0.73 32
2 ANDHRA BANK 67.28 69.26 74.32 72.23 77.52 78.62 79.46 74.10 0.06 2.81 11
3 BANK OF BARODA 66.94 70.18 74.46 72.55 74.87 74.67 69.25 71.85 0.04 0.57 34
4 BANK OF INDIA 71.00 75.64 75.33 73.33 71.30 78.20 75.78 74.37 0.04 1.09 28
5 BANK OF MAHARASHTRA 67.57 70.13 65.62 63.68 70.13 73.25 80.00 70.06 0.08 2.85 10
6 CANARA BANK 69.18 69.60 73.96 72.16 72.00 71.09 68.05 70.86 0.03 -0.27 42
7 CENTRAL BANK OF INDIA 62.57 66.17 65.12 65.01 72.33 75.20 76.06 68.92 0.08 3.31 5
8 CORPORATION BANK 70.71 70.70 65.57 68.15 74.39 73.80 71.51 70.69 0.04 0.19 39
9 DENA BANK 66.10 67.83 67.08 69.07 69.82 73.47 67.67 68.72 0.04 0.39 36
10 INDIAN BANK 61.71 65.26 70.81 70.44 71.12 74.77 74.41 69.79 0.07 3.17 7
11 INDIAN OVERSEAS BANK 68.46 71.66 74.80 71.30 77.00 78.87 79.34 74.49 0.06 2.49 16
12 ORIENTAL BANK OF COMMERCE 68.97 70.08 70.21 69.43 68.97 71.80 73.31 70.40 0.02 1.02 29
13 PUNJAB & SIND BANK 60.76 73.87 70.99 66.40 71.39 73.11 72.81 69.90 0.07 3.06 8
14 PUNJAB NATIONAL BANK 69.07 71.79 73.75 74.84 77.38 77.39 78.84 74.72 0.05 2.23 18
15 SYNDICATE BANK 65.71 67.30 70.36 77.25 78.75 78.27 79.61 73.89 0.08 3.25 6
16 UCO BANK 72.45 68.93 68.65 67.40 68.19 75.02 73.97 70.66 0.04 0.35 37
17 UNION BANK OF INDIA 73.24 71.59 69.60 70.17 74.58 79.81 78.90 73.98 0.05 1.25 27
18 UNITED BANK OF INDIA 59.61 59.31 64.90 62.09 68.73 70.74 68.46 64.83 0.07 2.33 17
19 VIJAYA BANK 64.42 66.09 65.04 67.02 66.51 69.72 71.91 67.24 0.04 1.85 22
20 STATE BANK OF INDIA (SBI) 77.46 77.55 73.11 78.58 81.03 83.13 86.94 79.68 0.06 1.94 21
21 STATE BANK OF BIKANER & JAIPUR 72.07 73.52 76.10 76.37 76.52 79.98 79.78 76.33 0.04 1.71 25
22 STATE BANK OF HYDERABAD 67.73 71.54 69.94 72.39 73.02 78.04 79.29 73.14 0.06 2.66 13
23 STATE BANK OF MYSORE 74.77 76.57 77.82 75.97 78.73 79.37 78.87 77.44 0.02 0.89 31
24 STATE BANK OF PATIALA 73.42 74.94 72.64 71.80 75.56 79.25 83.23 75.83 0.05 2.11 19
25 STATE BANK OF TRAVANCORE 79.49 79.59 77.55 75.59 79.17 77.44 79.75 78.37 0.02 0.05 40
26 IDBI LTD 144.09 112.62 92.02 82.43 87.04 85.79 86.43 98.63 0.23 -8.17 46

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27 CITY UNION BANK LTD. 70.84 70.62 76.71 66.44 71.67 74.28 75.09 72.23 0.05 0.97 30
28 ING VYSYA BANK LTD. 77.67 71.47 83.19 71.55 78.17 81.61 76.87 77.22 0.06 -0.17 41
29 TAMILNAD MERCANTILE BANK LTD. 67.22 69.51 78.13 71.20 78.00 80.53 80.38 75.00 0.07 3.02 9
30 THE CATHOLIC SYRIAN BANK LTD. 63.44 62.31 58.17 64.01 75.87 72.26 71.72 66.83 0.10 2.07 20
31 THE DHANALAKSHMI BANK LTD. 59.49 58.25 64.32 70.53 72.35 74.19 69.42 66.94 0.09 2.61 15
32 THE FEDERAL BANK LTD. 69.03 72.95 69.54 74.74 74.28 77.15 76.54 73.46 0.04 1.74 24
33 THE JAMMU & KASHMIR BANK LTD. 67.79 66.04 63.42 61.92 58.63 62.00 61.04 62.98 0.05 -1.73 45
34 THE KARNATAKA BANK LTD. 68.05 63.72 58.08 60.83 63.46 65.55 69.91 64.23 0.06 0.45 35
35 THE KARUR VYSYA BANK LTD. 75.38 75.07 68.93 69.78 72.06 74.58 76.27 73.15 0.04 0.20 38
36 THE LAKSHMI VILAS BANK LTD. 71.97 68.68 71.14 69.17 72.60 72.19 74.93 71.52 0.03 0.67 33
37 NAINITAL BANK LTD. 53.70 55.58 52.94 51.38 59.41 55.07 57.88 55.14 0.05 1.26 26
38 THE RATNAKAR BANK LTD. 60.53 53.20 61.29 73.84 93.29 87.19 76.45 72.26 0.20 3.97 3
39 THE SOUTH INDIAN BANK LTD. 64.70 68.97 65.49 68.76 68.94 74.74 71.88 69.07 0.05 1.77 23
40 AXIS BANK LTD. 62.73 68.09 69.48 73.84 75.25 77.13 77.97 72.07 0.08 3.69 4
41 DEVELOPMENT CREDIT BANK LTD. 60.21 66.98 70.46 72.27 76.32 83.41 78.74 72.63 0.11 4.57 1
42 HDFC BANK LTD. 68.74 62.94 69.24 75.17 76.70 79.21 80.92 73.27 0.09 2.76 12
43 ICICI BANK LTD. 84.97 92.30 99.98 89.70 95.91 99.31 99.19 94.48 0.06 2.61 14
44 INDUSIND BANK LTD. 62.82 67.21 71.33 76.94 76.14 82.77 81.90 74.16 0.10 4.52 2
45 KOTAK MAHINDRA BANK LTD. 99.31 94.69 106.27 86.97 100.23 101.41 94.98 97.70 0.06 -0.74 43
46 YES BANK 76.51 71.05 76.71 82.81 74.80 77.29 70.20 75.62 0.06 -1.43 44
Sources : Compiled from Trend and Progress Report of RBI, Various Issues

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 SECTION II

4.6 BANK GROUP- WISE FINANCIAL PERFORMANCE

After analyzing financial performance of different banks, it is necessary to evaluate the

performance of various bank groups. For present study, all public and private sector banks are
divided into six groups i.e. SBI and associates, Nationalized bank, All private sector banks, New
private sector Banks, Public sector Banks and private sector banks. All the 26 public sector
banks are divided in to two groups namely SBI and its associates and Nationalized Banks. In SBI
and associates we have included SBI and its five associates. Nationalized banks consist of
remaining 20 public sector banks including IDBI Ltd. All the private sector banks are also
divided into old private sector banks and new private sector banks group. In old private sector
bank group 13 banks are included while remaining seven banks (Axis Bank, Development Credit
Bank, HDFC Bank, ICICI Banks, Indusind Bank, Kotak Mahindra Bank and Yes Bank) are
considered as new private sector banks.

To analyse the financial performance of above bank groups CAMEL Approach is used. All the
important ratio which are taken in previous section, are also used for bank group analysis.

Capital Adequacy Ratio (CAR)

CAR is used to know the depositor‟s confidence. It also act as an indicator of bank leverage.
Table 4.8 represents the CAR of various bank groups. On the basis of mean CAR, Private sector
banks (15.51%) are much ahead of public sector banks (12.77%). New private sector banks have
highest average CAR among all bank groups. The performance of SBI and associates is better
than Nationalized Bank with regard to this indicator.

Bank group wise analysis, on the basis of growth rate reveal that SBI and associate (-0.54%)
have registered lower negative growth rate when compare to nationalized (0.15%), new private
sector banks (4.55%) and private sector banks (1.47%). The growth rate of new private sector
banks is far better than all other bank groups. There exist hardly any significant variations in CV
with respect to this indicator. A close look at the table reveals that all the bank groups have fulfill
RBI norms with regard to CAR under present study period.

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Table 4.8 Capital Adequacy Ratio of Bank Groups: 2006-07 to 2012-13 (In Percentage)

NAME OF BANKS GROUPS 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 MEAN CV GR
SBI AND ASSOCIATES 12.44 12.55 12.87 13.16 13.21 13.38 12.04 12.81 0.04 -0.54
NATIONALIZED BANKS 12.22 11.95 13.25 13.28 13.40 12.84 12.33 12.75 0.05 0.15
OLD PRIVATE SECTOR
13.94 15.95 16.35 16.24 17.12 14.27 13.97 15.40
BANK 0.09 0.03
NEW PRIVATE SECTOR
12.62 14.34 15.62 17.67 16.77 16.62 16.48 15.73
BANK 0.11 4.55
PUBLIC SECTORS BANKS 12.27 12.09 13.16 13.25 13.36 12.97 12.27 12.77 0.04 -0.01
PRIVATE SECTORS BANK 13.52 15.44 16.12 16.69 17.01 15.01 14.76 15.51 0.08 1.47
Sources : Compiled from Trend and Progress Report of RBI, Various Issues

Table 4.9 Net NPAs to Net Advance of Bank Groups: 2006-07 to 2012-13 (In Percentage)

NAME OF BANKS GROUPS 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 MEAN CV GR
SBI AND ASSOCIATES 0.80 0.71 0.64 0.89 1.06 1.61 1.87 1.08 0.74 15.25
NATIONALIZED BANKS 0.97 0.80 0.78 2.45 0.98 1.40 1.90 1.33 0.60 11.78
OLD PRIVATE SECTOR BANK 1.17 0.83 0.99 1.02 0.61 0.68 1.01 0.90 0.88 -2.37
NEW PRIVATE SECTOR
0.90
BANK 1.19 1.03 1.55 1.18 0.51 0.38 0.43 0.87 -15.50
PUBLIC SECTORS BANKS 0.93 0.77 0.73 2.15 1.01 1.47 1.99 1.29 0.60 13.48
PRIVATE SECTORS BANK 1.18 0.91 1.19 1.08 0.57 0.57 0.80 0.90 0.86 -6.26
Sources : Compiled from Trend and Progress Report of RBI, Various Issues

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Net NPAs to Net Advances

The data on Net NPAs to Net Advance of public and private sector banks
and their sub groups are presented in table 4.9. The average value of this indicator is lowest in
private sector banks compare to public sector and other groups. This shows that private sector
banks are performing much better than public sector banks. The average Net NPAs to Net
advance of new private sector banks is very much lower than other bank groups. The quality of
assets of new private sector banks is much stronger than other bank groups under present study.
It is further observe that growth rate of new private sector bank is lowest followed by private
sector bank and old private sector banks. The growth rate of Net NPAs to Net advances of public
sector bank and its sub groups is positive. This shows that they are not managing their non
performing assets efficiently. On the basis of growth rate also private sector banks are much
better than public sector banks.

An insight into the coefficient of variation reveal that their exist huge variation on Net NPAs to
Net Advances. Hence, stability in NPAs varies widely from group to group and from year to year
as well.

Business per Employee (BPE)

The Business per Employee of different bank groups during the period
2006-07 to 2012-13 are shown in table 4.10. Inter-group analysis revealed that new private sector
bank, on an average incurred higher BPE than other bank groups. Average Business per
Employee of private sector banks (Rs.7.20 Cr.) is higher than public sector banks. (Rs.5.30 Cr.).
SBI and Associates have least business per employee in comparison to other bank groups.

It is further observed that the rate of growth in BPE of old private sector banks (13.47 %) is
highest followed by Nationalized Bank (12.08 %). It may be seen that growth rate in BPE of
public sector banks is more than private sector banks of all the banks groups. New private sector
banks incurred much lower growth rate in BPE. There do not exist any significant variation in
CV for all bank groups.

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Table 4.10 Business per Employee of Bank Groups: 2006-07 to 2012-13

NAME OF BANKS GROUPS 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 MEAN CV GR
SBI AND ASSOCIATES 2.94 3.53 4.31 4.82 5.82 5.50 5.73 4.66 0.24 11.73
NATIONALIZED BANKS 3.26 4.19 4.77 5.74 7.02 6.99 6.50 5.50 0.27 12.18
OLD PRIVATE SECTOR
4.27 4.92 5.62 6.34 7.44 8.21 9.10 6.56
BANKS 0.27 13.47
NEW PRIVATE SECTOR
7.15 7.45 7.44 8.47 9.78 9.00 9.54 8.40
BANKS 0.13 4.92
PUBLIC SECTORS BANKS 3.19 4.04 4.67 5.53 6.74 6.65 6.32 5.30 0.26 12.08
PRIVATE SECTORS BANKS 5.27 5.80 6.26 7.08 8.26 8.49 9.26 7.20 0.21 9.83
Sources : Compiled from Trend and Progress Report of RBI, Various Issues

Table 4.11 Profit per Employee of Bank Groups: 2006-07 to 2012-13

NAME OF BANKS GROUPS 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 MEAN CV GR
SBI AND ASSOCIATES 6.20 7.78 9.32 10.11 11.29 12.31 13.67 10.10 0.26 14.08
NATIONALISED BANKS 4.63 5.87 7.27 8.64 10.51 11.74 13.10 8.82 0.35 18.93
OLD PRIVATE SECTOR BANK 3.10 4.06 5.17 4.92 5.68 6.27 7.88 5.30 0.29 16.81
NEW PRIVATE SECTOR BANK 4.19 4.96 4.84 6.71 9.25 9.83 11.54 7.33 0.39 18.40
PUBLIC SECTORS BANKS 4.99 6.31 7.75 8.98 10.69 11.87 13.23 9.12 0.33 17.64
PRIVATE SECTORS BANK 3.44 4.34 5.07 5.49 6.81 7.40 9.03 5.94 0.32 17.44
Sources : Compiled from Trend and Progress Report of RBI, Various Issues

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Profit Per Employee (PPE)

The profit per employee of public sector banks and private sector banks and their sub groups
have shown a rising trend during the study period (table 4.11). The PPE of private sector bank,
which were Rs. 3.44 Lakh in year 2006-07, in increased to 5.94 Lakh in 2012-13, representing a
growth rate of 17.44%. On the basis of Average Profit per Employee, public sector banks are
much higher than private sector banks. The average profit per employee of old private sector
banks is much lower than other bank groups.

The public sector banks and private sector banks have witnessed almost similar growth rate in
profit per employee, while nationalized banks have shown highest growth rate among all bank
groups.

It is further observed that the variations in CV are not significant. Hence, profit per employee of
different bank groups is stable during the period under study.

Return on Assets (ROA)

Return on assets is also an important indicator to measure asset quality of a bank. Table 4.12
despicts the net profit of bank groups as a percentage of total assets during the study period.
Average Return on Assets of private sector bank is higher than public sector bank. This shows
that assets of private sector banks are utilizing and earning better than public sector banks.

This table also indicates that average Return on Assets of new private sector banks is highest
among all bank groups while SBI and associates have lowest Return on Assets among all bank
groups.

Public sector banks and its sub group (SBI and Associates, Nationalized Banks) have
shown negative growth rate in Return on Assets. The growth rate of Return on Assets of new
private sector banks is very much higher than other bank group. This show that assets of new
private sector banks utilizing efficiently during the study period. On the basis of growth rate, it is
also found that the performance of private sector banks is much better than public sector banks.

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Table 4.12 Return on Assets of Bank Groups: 2006-07 to 2012-13 (In Percentage)

NAME OF BANKS GROUPS 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 MEAN CV GR
SBI AND ASSOCIATES 0.92 0.89 0.92 0.93 0.99 0.87 0.77 0.90 0.07 -2.91
NATIONALISED BANKS 0.98 1.06 1.03 1.01 1.00 0.88 0.76 0.96 0.11 -4.11
OLD PRIVATE SECTOR BANK 0.91 1.14 1.24 1.03 1.06 1.21 1.12 1.10 0.10 3.56
NEW PRIVATE SECTOR BANK 0.89 1.00 0.70 1.00 1.34 1.49 1.61 1.15 0.29 10.51
PUBLIC SECTORS BANKS 0.97 1.02 1.00 0.99 1.00 0.88 0.77 0.95 0.10 -3.84
PRIVATE SECTORS BANK 0.90 1.10 1.07 1.02 1.15 1.30 1.28 1.12 0.13 5.96
Sources : Compiled from Trend and Progress Report of RBI, Various Issues

Table 4.13 Spread as percentage of Assets of Bank Groups: 2006-07 to 2012-13 (In Percentage)

NAME OF BANKS GROUPS 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 MEAN CV GR
SBI AND ASSOCIATES 2.19 1.76 1.88 2.07 2.60 2.45 2.44 2.20 0.14 1.80
NATIONALISED BANKS 2.73 2.26 2.19 2.13 2.57 2.48 2.31 2.38 0.09 -2.72
OLD PRIVATE SECTOR BANK 2.86 2.65 2.66 2.42 2.75 2.66 2.66 2.67 0.05 -1.22
NEW PRIVATE SECTOR BANK 2.28 2.66 3.12 2.99 2.97 2.94 3.03 2.86 0.10 4.87
PUBLIC SECTORS BANKS 2.60 2.14 2.12 2.11 2.58 2.47 2.34 2.34 0.09 -1.76
PRIVATE SECTORS BANK 2.68 2.65 2.81 2.60 2.82 2.74 2.78 2.73 0.03 0.60
Sources : Compiled from Trend and Progress Report of RBI, Various Issues

Table 4.14 Credit-Deposits Ratio of Bank Groups: 2006-07 to 2012-13 (In Percentage)

NAME OF BANKS GROUPS 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 MEAN CV GR
SBI AND ASSOCIATES 85.26 81.46 77.68 75.76 78.34 79.98 81.23 79.96 0.04 -0.81
NATIONALISED BANKS 67.70 69.68 70.52 69.88 72.88 75.26 75.07 71.57 0.04 1.74
OLD PRIVATE SECTOR BANK 66.29 65.68 66.47 67.81 72.49 73.40 72.40 69.22 0.05 1.48
NEW PRIVATE SECTOR BANK 75.43 75.86 82.33 80.64 83.35 87.23 84.32 81.31 0.05 1.88
PUBLIC SECTORS BANKS 71.75 72.40 72.17 71.23 74.14 76.35 76.49 73.51 0.03 1.07
PRIVATE SECTORS BANK 69.17 68.90 71.48 71.86 75.92 77.77 76.17 73.04 0.05 1.62
Sources : Compiled from Trend and Progress Report of RBI, Various Issues

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Spread as a percentage to Assets

The difference between interest received on loans and interest paid on deposits in known
as spread. If the difference is more, profits tend to be high. Spread as percentage of
Assets for seven years are shown in table 4.13.

The mean value of Spread as a percentage to Assets of private sector banks is higher than
public sector banks. This show that private sector banks have been generating substantial
income from fee based activities. On the other hand, public sector banks are mostly
depend on interest income, reflecting lack of diversification into fee based activity (RBI,
Report on Currency and finance 2003). SBI and associates has least average Spread as a
percentage to Assets in comparison to other bank groups.

The growth rate of private sector banks is positive, while public sector banks group has
negative growth rate. This table also revealed that new private sector banks group has
much higher growth rate in Spread as a percentage to Assets among all bank groups. It is
further observed that CV of different bank group is not significant which reflect stability
in Spread as a percentage to Assets.

Credit-Deposit Ratio (CDR)

The data on credit deposit ratio of public sector and private sector banks and their sub
groups are shown in table 4.14.

The average C-D Ratio of new private sector bank groups is highest followed by SBI and
associates, Public sector banks and private sector banks. Nationalized banks have least C-
D Ratio.

The growth rate of SBI and Associates is negative while all other groups have positive
growth rate with regard to C-D Ratio. New private sector banks have registered highest
growth rate followed by nationalized banks and private sector banks. On the basis of CV,
all bank groups have shown stability in C-D Ratio.

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CONCLUSION

In brief, the financial performance analysis of public and private sector banks using
CAMEL approach reveals that on an average private sector banks are much ahead of
public sector banks. In the present study CAR is considered, ICICI Bank, Axis Bank and
Yes Bank are much stronger than other banks. On the basis of asset quality, again new
private sector banks are performing better than other banks. From the business per
employee point of view, public sector banks are performing well than new private sector
bank. When profit per employee is considered new private sector banks are earning more
than private sector banks. Again from the earning point of view new private sector banks
are better performer in comparison to other banks. This show that new private sector
banks are giving importance to their earning capacity and efficiently utilizing their asset.
When liquidity is considered most of new private sector banks are again in batter position
in comparison to public sector banks.

Indian commercial banks should always remember that banking is service industry and
focus more on service quality as new private sector bank. On the whole, it appears that
new private sector banks are better than old private sector banks and public sector banks.

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